Experts make case for why branding is essential for biz success

Experts believe that rapidly-expanding business dynamics call for crucial restructuring of corporate branding strategy and insisted that brands in the new millennium will need to be responsible and responsive to consumers and other stakeholders.

Six top marketing leaders took centre-stage outlining their industry experience pertaining to why they think branding is essential at the Brand Symposium organised by Sri Lanka Institute of Marketing (SLIM) last week. The event was staged for the benefit of local marketers, who were given the opportunity to draw upon the expertise of industry leaders in order to develop their thinking and competencies and network with other marketers in the country.

The misconception

of branding

While acknowledging that the word brand is one of the most misused words in the industry, Brand Finance Lanka Managing Director Ruchi Gunawardena highlighted that that misapprehension exists among marketers as well.

Denoting the three main areas of misconception, he said: “Many people associate brand with a logo, design or advertising. The other misconception is when you talk about brand people think it’s the responsibility of the marketing department and no one else can touch that. The third misconception is that they think it’s an expense and they don’t see it as a value generating asset.”

Elaborating on how businesses don’t give prominence to intangible assets such as brand, he stressed: “Because we don’t see these intangibles in the balance sheet we often forget about brand and this is the core issue of business as it’s not included as a number and therefore forgotten.”

A brand is known to have a multiplier effect as it’s known to impact an organisation in many ways. Companies such as tech giant Apple Inc. have significantly given less priority for tangible assets and has increased its intangibles in comparison. This is evident as the company outsources its manufacturing processes and gives prime focus on brand enhancement, subsequently becoming one of the most profitable companies globally.

Creating value

through brands

Brands create value throughout the business, he said, as it interacts not just only with the customers as marketers would most likely to believe.

Pointing out on areas that value is created through the brand which often goes unnoticed, he said: “If a company has high brand equity usually what happens is it attracts better quality suppliers and these suppliers would want those customers in their portfolio as well. They would offer better prices often and terms.”

Taking the examples of local apparel success stories such as MAS Brandix and Hirdaramani which are well known globally, he said: “Machinery suppliers would give preferential trade terms and pricing than which they would for a smaller company because they want to be a part of that high brand equity.”

“The corporate brand has also played a significant role in attracting better quality employees as individuals want that brand as part of their career portfolio. Therefore they would join at low price points and hopefully be more motivated.”

Further he pointed out that brand has a major impact on cost of capital as funding institutions offer external capital at a favourable rate to companies with high brand equity and the likelihood of attracting better investors is also high for these companies.

Explaining how to sustain the value created by the brand, he noted: “It starts with facts and information and we need to look at it holistically in terms of the points where it’s created. The CEO would then put resources behind these relevant points. Then we need to really drill down to the next level and identify the key drivers.”

He highlighted that subsequent to strenuous market research, many companies fail to define the brand image to capture its true essence.

“You then go on to building the brand internally where the HR department will have to play a major role in terms of providing employees the understanding. Thereafter you use the tools at the discretion of the management to provide 360-degree context for customers. All these should happen before you actually invest a significant amount of money for public relations,” he added.

The Dilmah story

Delivering the second address of the day, Dilmah Ceylon Tea Director Dilhan Fernando laid down the story of one of the strongest brands in the country and how his father Merrill J. Fernando brought his vision to life.

“What drove the burning desire and dream in my father was when he saw how in Sri Lanka we produce an incredible finished product and due to structural problems Sri Lanka didn’t receive the due reward for the work of our tea pickers, tasters and so on, even up to the 1980s,” Fernando said.

He stressed that the turning point was when that they discovered that the consumer was leaving Ceylon Tea behind as the local tea industry was talking to a consumer in the 1980s with an outdated dialect.

“In this environment we came to a conclusion – yes we have a very strong sense of purpose, yes we have to hand pick our tea and honour tradition as there is only one way to make tea, which is the hard way. However we looked primarily at how we can engage with the consumer. Here in the Sri Lankan market even now I feel there is inadequate understanding of the consumer.”

Acknowledging that today the company is dealing with the centennial consumer, he said: “Whilst many publications will tell you how tough they are, I would argue the opposite. They are probably the best chance we have to brand our produce. They are an intelligent and informed generation and I believe that they are a generation that would value what we have to offer in Sri Lanka.”

Dilmah’s purpose lies in creating tea in the traditional way, while reimagining a new tea experience.

“We looked at bars and cafes; we looked at the incredible phenomena in coffee shops. In 2003 we started the tea bars which stopped very soon when I got a letter from the ministry which said that we shouldn’t introduce alcohol to tea and instructed us to stop that exercise immediately. But it won’t happen today.”

Based on this experience Dilmah went on to launch its successful venture ‘Dilmah Tea Lounge’ which currently has two outlets in premium locations.

“We engaged with chefs in Sri Lanka and overseas and we tried to look at how we can engage with the consumer in this most popular method of passing time. If you look at any country’s television ratings in most territories in which we operate, find that out of the top five rated television programs, two or sometimes three, would very often be related to food. So we thought we would try to engage through food,” he explained.

However, he insisted on the need to back purpose and desire with quality, innovation and engagement with customers.

As Sri Lankan brands look to expand internationally, it seems that a lack of understanding of both the retail and hospitality environment and the means of overcoming those barriers have pushed many towards very short-term private label or price-based offerings. For sustainability in the long term, both in the tea and other Sri Lankan industries, it is absolutely essential that brands go beyond price competition and genuinely add value. Another important aspect is also the use of business for human service – in the field of humanitarian aid, education and sustainability.

Facebook vs. Google

Giving insight to how Kapruka made its way into the business arena predominantly via digital channels, Kapruka.com Founder Chairman Dulith Herath said: “Our offline marketing budget is about 3% and during 2015 and 2016 our Google add space was about $ 100,000; the brand was pretty much entirely built online. That’s quite different than most of the established brands today and it took me about 10 years to do it.”

Elaborating on his area of expertise, he stressed that there’s a significant misconception on online branding platforms as everyone has got onto the Facebook advertising bandwagon.

“When everybody is new to online branding, you think that it’s about Facebook, Instagram, Twitter and Pinterest and then go on to do Google ad sales. What we are forgetting to understand is that these two platforms are extremely native to their core. You don’t go to Facebook to find advertisements, you go there to find out what others are doing. It’s almost like you’re having a sandwich and coffee with a bunch of friends and a guy jumps in the middle and tries to sell you a phone. What happens is you will not get conversions. You will get likes and shares and it will make you happy but at the end of the day it won’t impact your bottom line,” Herath noted.

Stressing on the Google impact, he said: “When you’re doing an ad via Google, you’re going to be specifically targeting a guy who’s looking for a Samsung J7 phone for example.”

Herath asserted that Search Engine Optimisation (SEO) is not dead and is more difficult to master than ever.

“A good 60%-70% of online traffic comes from your brand being searched online. This is the same case with our conversions rate. So you got to really connect your ads to the SEO as much as possible. Now it’s more complicated than ever before and it’s no longer the algorithms we used to know. It’s a very user-oriented algorithm,” he noted.

Pitfalls of digital branding

According to Herath, one of the biggest concerns in digital branding is giving controls to the wrong people. “A lot of people when they are trying to get into digital give the entire digital marketing exercise to a third party. Most of these third parties are also experimenting with your money. It’s something I feel that you as marketers should learn on your own and understand and spend time studying the subject and then hand it over.”

He also added that companies don’t carry out research to determine where the brand stands online. “If someone searches for a Honda scooter and TVS scooter comes up, that’s brand vandalism. This is not allowed so you can immediately report the ad and Google will take it up. How many of you are actually doing this today?”

On the other hand, Herath pointed out the natural pull of e-commerce is due to the price gap between brick-and-mortar organisations and online platforms subsequently asserting that everybody should have be inclusive in e-commerce.

Citing global examples, he said that massive companies such as Sears, JC Penny, Kohl’s and Target have seen major disruption in sales in the past decade due to rising online giants such as Amazon.

Sustainability-led branding

As the Global Sustainability agenda takes centre-stage, influenced by the UN Sustainable Development Goals launched in September 2015, many enlightened business leaders have mainstreamed it in their corporate strategies. Many of these organisations have adopted sustainability-led corporate branding

For example, Unilever’s Sustainable Living Plan and product or category branding. Moreover, Tesla has embedded ecomagination as its overarching vision. Thus Sri Lankan companies need to mainstream sustainability in their corporate strategies.

Pointing out the Sri Lankan case at the symposium, INSEAD Europe Campus Executive in Residence Ravi Fernando said: “In Sri Lanka with all the research I’ve come across I find that most companies gave two strategies. They have a corporate strategy which is driving their business and they also have a CSR strategy on the side. The key point I’m trying to make here is that today the global agenda has been set in terms of sustainability. If you have two strategies in this manner, you’re on the wrong track.”

“Corporate sustainability is not about how money is spent, it’s about how money is made. If you have a business model that’s not integrating sustainability into your corporate strategy and if you’re a company which boasts about doing a ton of right things, then I can tell you they haven’t integrated the two,” Fernando stressed.

He said most companies think that they can drive their economic bottom line and with that money, irrespective of the negative impact the organisation is having on the environment and humanity, they’re doing a great job by apportioning funds for CSR activities.

“One way to do this is assuring profit growth while assuring that you’re a steward of the planet at the same time and helping people progress.” He noted.

“There is a massive reduction in rainfall in Sri Lanka, between 2014 and 2015 the decline was about 40 days and if this decline which took rainfall days from 197 to 157 continues we will only have another 15 years of regular rainfall. Sri Lanka has deforested more than any other country in the planet, global deforestation within the last 30 years is 50% in Sri Lanka we have taken down 84% of our forest cover.”

Stressing on the environmental damage caused in Sri Lanka over the past decade, Fernando urged companies to act fast on environmental issues. “Whatever business or sector you’re in, it’s crucial that you understand if you want your brand to succeed you must engage with the trend that is now a global reality and if you’re ignoring that by doing so you would basically be out of business.”

Brands in the new millennium

Bates Strategic Alliance CEO Nimal Gunawardena in his remarks highlighted that brands in the new millennium will need to be responsible and responsive to consumers and other stakeholders. They need to engage, going beyond advertising.

“Communication and behaviour go hand in hand; what we are, what we do, is very much how we act. So we can communicate and say all these wonderful things but at the end of the day it’s how we act,” Gunawardena added.

He also went on to say that the purpose of brands in the last century was to create shareholder value wherein in the new millennium it has shifted to brands and businesses being accountable to all stakeholders. In turn brands must be cool in design, delighting in experience, fair and ethical, responsible and responsive to people and the planet.

He also called for building brands through social media engagement, leveraging sharing via referrals and building brands through activism.

Fernando stressed that even though many organisations in Sri Lanka have moved onto online channels, they do not respond to complaints and queries in social media.

“I see a lot of complaints going unanswered or they just copy and paste a generic corporate message. We need to learn how to turn these into positive brand opportunities,” he added.

Branding Sri Lanka – A myth or opportunity?

Deliberating on how place branding came into existence, John Keells Group Vice President Dileep Mudadeniya highlighted how globalisation has forced countries to compete with one another for attention, investors, tourists and political recognition.

According to various reports post-war Sri Lanka is ranked at the 58th spot in the Future Brand Report and 63rd spot in the Bloom Ranking Report while it has been placed in the 78th spot in the Good Country Index out of 150 countries taken into consideration.

“The top 20 countries in the world, whatever they do everyone wants to have some interaction with them and the 30 countries in the bottom, however good they are, people don’t really care. All these countries can forget about nation branding both if they are extremely bad or good and they don’t need it. However the countries in between must be mindful of what they need,” Mudadeniya noted.

He stressed that if Sri Lanka is trying to initiate a nation branding exercise by giving it a logo or design, it’s exactly the wrong way to go.

Citing an example on how it went wrong in our neighbouring country India, Mudadeniya said: “The ‘Incredible India’ campaign was launched in 2004 and has been running now for more than 12 years. Have you changed your perception about India with this campaign? The answer is no. You don’t change perception of countries because of your campaigns but it has been good for tourism, which is a different perspective.

“In branding, reputation is something you need to earn, you cannot buy it. The only way you can earn reputation is through action and policy changes on ground, without which you can’t achieve anything. Sometimes even very small steps can have a significant impact.”

Sri Lanka was able to come to 60th position without much of a conscious branding exercise, however much work is yet to be done. Hence it’s required to peruse a conscious place branding like many other post-conflict countries like Croatia, South Africa, and countries like Australia, New Zealand and Dubai.

Bringing the proceedings to an end Dunamis Capital Chairman Eardley Perera pointed out the key learnings at the SLIM Brand Symposium based on the ideas shared by the six experts. Among the key takes were the importance of branding for value creation among all stakeholders including consumers; the need for top-led branding strategy and consumer centric approaches determined by proper research. The importance of ethics and responsibility with focus on sustainability was another a key learning emphasising the point that ethics are key to building brands and businesses. Best practices help build brand reputation as deviation from such a course could be destructive. The forum also stressed that to be effective marketers need to pursue a conscious and consistent strategy rather than ad-hoc.

Pix by Upul Abayasekara

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